Credit Lines (asset based lending) Vs. Factoring Loans

Asset Based Lending Vs. Credit Line

According to the latest statistics, it has been revealed that traditional lending is showing a downward turn and people are showing interest in asset based lending. In fact, growing by the uptrend in the asset based lending, it is expected to grow even more in the future. The overall volume of small business loans has been sliding down according to FDIC.

This downward trend has been noticed since 2008. Recently, the volume of small business loans went down 15% from its peak. Since the year 1999, the number of outstanding small business loans has been continuously declining. The figure currently stands at about 1.5 million as notified by FDCI.

An Asset Based Lending Index is formatted by the Commercial Finance Association and published quarterly. The most recent report indicates there was a 1.8% rise in the total committed asset-based credit lines in the first quarter of the year 2012 in comparison to the previous quarter. Also, as compared to the earlier year, the total credit commitments were up by as much as 7.3%. Moreover, there was an increase in the new credit commitments in more than half of asset-based lenders by almost 55 per cent.
In the first quarter of the year 2012, the utilization of asset-based lender’s credit has jumped to 40.85. The rise was 39.4 per cent in the previous quarter. And in the same quarter in the year 2011, it was 39.1 per cent.
Brian Cove, the CFA’S chief Operating Officer points out that the asset based lenders will continue to take the fore front as the primary source of growth and working capital for the United States as they have managed to maintain throughout the credit crisis and through the recession, if the economy continues to prosper with the same rate.

Asset-based lending comprises of many kinds of loans that can be granted to a borrower wherein some kind of assets serve as the security.

Factoring & asset based lines of credit are the two-common type of asset-based loans which are practiced.

Factoring loan, a factor or a financial institution comes into play which buys the outstanding accounts receivable of the business. Thus, factoring is not a typical kind of loan as it involves sale of receivable and a direct third party involvement in the business. The lending amount that is generally granted by the factor ranges between 70 to 90 percent of the value of the account receivable when this purchase is made.
A factoring fee is taken from the remaining amount and the balance is released when the invoices are collected. Factoring fee can be anywhere between 1.5 to 3 percent, based on risk profile. This fee depends on factors like the risk involved and the number of days for which the funds issued will be used.
A factoring agreement gives freedom to the business to choose which invoices it wants to sell to the factor. Once an invoice is sold, the factor manages the receivable and related collection. The factor becomes a de facto credit manager for the business and performs credit checks, manages payments and other related tasks. The documentation of these payments and analyses of credit reports also becomes the responsibility of the factor.

A Line of Credit loan is more of a typical bank loan with certain notable differences. A traditional loan can be secured through collaterals like equipment, personal assets or real estate, but A/R lending is restricted to securing the loan through trade outstanding account receivable. Under the account receivable lending arrangement, each draw by the borrower results in generation of a borrowing base against which the business can borrow. The lending institution charges a collateral management fee against the outstanding amount. If the funds are advanced, the borrower is charged interest only on the amount which has been borrowed.
An invoice can contribute towards a borrowing base only it is less than 90 days old. There are other eligibility conditions to A/R financing that can be exercised by the lender. These include cross-aged, government customers, international customers and concentration limits on a particular customer. Sometimes, if a particular customer has a higher share in the collateral, the lender can choose to do a background check on that customer to decide the credit worthiness of the business.

Be informed, be prepared, do your homework.

VIP POS System Overview

  • Customizable Software  Open API (3rd party integrations) Hardware With Optional add-ons POS Systems
  • FREE Lifetime Hardware Warranty With Next Day Replacement
  • FREE 24/7 VIP Technical Support
  • FREE Online Reporting From Anywhere
  • FREE Paper
  • FREE Installation
  • FREE Training
  • Breach insurance available
  • PCI compliance fee only $89/year
  • The base package will include the following:
  • POS Elite System
  • Cash Drawer Receipt Printer Keyboard and Mouse 10 Employee Cards
  • Caller Id
  • Barcode Scanner
  • Kitchen Video Systems
  • And More

*FREE Lifetime Hardware Warranty – All hardware replacements will be shipped next day    at no cost

  • Access your sales reports right on the POS system or remotely
  • Add, edit or remove menu items, screen categories, modifiers and modifier categories
  • Track labor and manage employees
  • View statements, chargebacks and deposits
  • Utilize the internal messaging system
  • View “how-to” demonstration videos and quick reference guides right on the POS system

Communicate with the technical support department through the live chat feature

  • VIP “white glove” priority service – From the time the account is submitted, through programming, installation and ongoing support
  • FREE 24/7 technical support
  • FREE 24/7 customer service
  • FREE remote support – The support team can log in to your system to remotely to instantly repair any software issues you may experience


  •  Onsite Installation – Experienced and certified installation professionals ensure you are up and running
  • Comprehensive Training – Preliminary onsite training and extensive remote training to make sure you are proficient
  • Certified Tier 3 Technicians – Highly trained techs and supervisors to provide a superior experience EVERYTIME
  • Convenient Scheduling – We work around your schedule to complete the installation, avoiding any business disruptions


  • Our Elite POS Systems are shipped with end-to-end encryption compatible card readers.
  • PCI Compliance is ONLY $89 a year.

Should non compliance occur, we will waive your obligation to pay up to $50,000 worth of non compliance related fines, levy’s, and assessments incurred as a result

Includes unlimited PCI System Scans

Ripoff Report Verified™ REVIEW: Harbortouch POS Systems/First Data/Global/Paymentech

Editor’s UPDATE: Positive rating and recognition has been given to Harbortouch for its commitment to excellence in customer service.

Ripoff Report’s discussions with Harbortouch have uncovered an ongoing commitment by the company to total client satisfaction. This means that clients can expect that the company will work towards finding a mutually satisfactory resolution to any complaints or concerns. Harbortouch listens carefully to client concerns and sees them as an opportunity to learn from past mistakes and become more efficient as a company in the services offered and the support for those services.

A BBB Accredited Business since 8/28/2007

BBB has determined that Bank Card Systems, Inc. meets BBB accreditation standards, which include a commitment to make a good faith effort to resolve any consumer complaints. BBB Accredited Businesses pay a fee for accreditation review/monitoring and for support of BBB services to the public.

  • Reviews & Complaints
  • View Customer Complaints [0]

Frank J. Eberhart, CEP® RFC® Author 973-479-2558


Small business has over 825 billion in unpaid invoices…that is 5% of our GDP

29.6 small businesses in America and employee about half of the entire workforce

Did you know that small business has $825 Billion in unpaid invoices?

825 billion- equates to 5% of the US GDP, so pay up to small business and help them and the economy

  • Most small businesses get paid in 21 days on invoices
  • But only have 27 days of cash reserves
  • 84 thousand in unpaid invoices
  • 81% are over 30 days past due.
  • Some industries wait even longer to get paid-as much as 90 days!

In the meantime, help your cash flow, your business, and your stress

We have programs to help from $5000 to $3 Million

Benefit from invoice factoring, Purchase Order Financing, Credit Lines, Collection Services

  • Improves cash flow, often within 24- 48 hours of invoice date
  • Allows companies to meet payment deadlines, such as payroll and fulfill new orders
  • Reduces time and resources spent collecting accounts receivable
  • Allows for better terms to large customers to help increase sales
  • Enables payment to suppliers quicker, taking advantage of early pay discounts
  • Evaluated credit limits for new customers
  • Improves company credit rating

Top 5 Reasons Companies Choose Asset-Based Lending

  • Optimize working capital
  • Support continued growth
  • Take advantage of opportunities
  • Need for flexible and customized package
  • Unable to get traditional financing due to high growth, limited sales history or restructuring situations

Top 5 Reasons Why Companies Choose Purchase Order Funding

  • Down payment to vendor to produce the product
  • Under-capitalized and in need of cash injection
  • Take advantage of opportunities
  • Need for flexible and customized financing options
  • Unable to get traditional financing due to high growth, limited sales history or restructuring situations

Collection Services

Experienced & Professional

  • Providing third party collection and verification services for over 12 years. Since 2012, processed over $1 Billion dollar in cash management with over 4000 third party debtors (paying sources). Our approach is to open lines of communication with third party debtors and the customer to ensure all paper work is accurate and validated to smooth out the cash flow and allow for a high level of predictability in cash flow.

 Invoice Verification & Collection Calls

  • Collection & verification analyst are information seekers to ensure the facts are reported back to our clients. Having an added clerical support person without taking on salary or benefits is an added value to our invoice factoring clients. Many business owner’s dislike chasing down the money and making credit calls falls on the priority list. With Sterling’s verification analyst making these calls it frees up the business owner to spend time driving sales and bring profits to the bottom line.

 Client Communication – Aging Notes Weekly

  • We provide weekly aging notes for the client to review and strategize collection plans. As a third-party verification firm, Verification analyst have been trained to provide real time information to our clients to ensure there are no surprise week to week with cash advances.

      Over 90-Day Trends – Industry Leading Under 5%

  • Our three year over-90-day collection rate under 5% of gross invoice collections. We provide collection and verification services nationwide for many industries. Sterling has many cases where over 90-day invoices averaged 15% to 25% and after engaging a full-time Sterling verification analyst invoices over 90-days dropped below the targeted goal of 5%.


See comparisons & services below…

For small business up to $100,000…

When you clear an invoice, we calculate a small fee on top of the invoice value. Repay us over 12 or 24 weeks. Your choice.

  • For a $1,000 invoice, your weekly payment would be about $89 for 12-week repayment. This includes $83 for invoice value, and roughly $6 in fees.
  • Fees may vary but you always know them before you commit to anything.
  • Payments are automatically debited from your bank account the week after you clear the invoice.
  • If you pay us back early, we waive all the remaining fees. This means if you paid us back on week 4, you’d only pay the fees for weeks 1-4. We would waive the fees for weeks 5-12 entirely.
  • Setting up an account is completely free, and there are no subscription fees, origination fees, or any other hidden fees at all.


For business $25,000 to 3 million

Product Comparison

Bronze Invoice Factoring Silver Invoice Factoring Gold Invoice Factoring Ledgered Line of Credit ABL Line
of Credit
Advance Rate 40.0% 75.0% 80.0% 85.0% 85.0% 85.0%
Very High Highest Moderate Moderate Moderate Low
Pricing 4% per month 3% per month 2% per month 1.50% per month Prime + 4% + Service Fee Prime + 4% + Service Fee
·         PO Converts in less than 60 days

·         Gross Margin is < 40%

·         Debtor Quality

·         Historical Payment from Debtor

·         Bank Statement Activity Last 90 days

·         Spot Factoring

·         Cash Paid to Lockbox

·         Under 12 debtors

·         Quick Set up 3 days

·         Invoice Mail Service

·         Monthly Statement Service

·         Collection Calls at 31, 45, 60 days

·         Cash Dominion of Funds

·         Weekly or Daily Funds

·         Debtors from 10-100

·         Annual sales of $1M to $5M

·         Balance Sheet Negative Equity

·         Cash Dominion of Funds

·         Weekly or Daily Funds

·         Debtors from 10-100

·         Annual sales of $2M to $20M

·         Balance Sheet Equity

·         Cash Dominion of Funds

·         Weekly or Daily Funds

·         Debtors from 10-100

·         Annual sales of $2M to $20M

·         Debt/TNW 25x:1 or better

·         Accounts Receivable Only

·         Cash Dominion of Funds

·         Weekly or Daily Funds

·         Debtors from 10-100

·         Annual sales of $2M to $20M

·         Debt/TNW 12x:1 or better

·         A/R + Inventory

·         A/R + Inventory + Machinery


Frank J. Eberhart, CEP®, RFC®, Author

P: 908.269.8878         F: 908.269.8879     C: 973.479.2558

699 Washington Street, STE 302 Hackettstown NJ 07840

Commercial Mortgages-SBA 7(a) & 504 Loans-Encrypted Credit Card/POS Systems

Section 179


Jan 1, 2016 –   The “Protecting Americans from Tax Hikes Act of 2015” (PATH Act) was passed by both the House and Senate and signed into law on 12/18/2015. This bill expanded the Section 179 deduction limit to $500,000. Read the summary from the Ways and Means committee here.

Section 179 Deduction: Until further notice, Section 179 is permanent at the $500,000 level. Businesses exceeding a total of $2 million of purchases in qualifying equipment have the Section 179 deduction phase-out dollar-for-dollar and completely eliminated above $2.5 million. Additionally, the Section 179 cap will be indexed to inflation in $10,000 increments in future years.

50% Bonus Depreciation will be extended through 2019. Businesses of all sizes will be able to depreciate 50 percent of the cost of equipment acquired and put in service during 2015, 2016 and 2017. Then bonus depreciation will phase down to 40 percent in 2018 and 30 percent in 2019.

IMPORTANT: Section 179 for Current 2016 Tax Year (This Year)
Section 179 can provide you with significant tax relief for this 2016 tax year, but equipment and software must be financed and in place by midnight December 31, 2016.

Calculation Using the Section 179 Calculator

Using a $75,000 equipment cost for a sample calculation shows how taking advantage of the Section 179 Deduction can significantly lower the true cost of the equipment purchased, financed or leased. In the example, $75,000 in equipment purchased has a true cost of $48,750. That’s $26,250 added to your bottom line. Would you like an extra “25 grand-plus” this year?

In order to qualify for the Section 179 Deduction, the equipment must be purchased, financed or leased and put into service by December 31 of this year!

So don’t delay!

Commercial Lending

Commercial lending made easy

It’s that time of year, holiday shopping, excitement for the holidays and….

Next years budget, marketing plan, and where do I get the money from? Party pooper huh? Well a word of caution to businesses shopping for money this holiday season-or anytime for that matter.

  1. Check your credit-credit karma is good because you do  not get any “dings” on your credit report.
  2. Correct anything that is not accurate NOW
  3. Do NOT apply at multiple lending institutions, select one and focus on that.
  4. Once you apply you get a ding, and every time you apply you get a ding-after about 3 dings the banks will give you a “dong”.
  5. Make sure you read all the terms and conditions BEFORE you sign.
  6. Make sure you can actually pay back the money.
  7. Create a marketing plan that makes sense and how you will achieve it and pay for it

Be informed, most banks do not like to lend to companies under 5 years,  2 years and under is very difficult same with start ups, there are factoring companies that can help, make sure you understand all the terms and rates in these type of companies!

Hope you all have a great holiday season and a very prosperous new year